Netflix vs HBO: Streaming Rises as Premium Shrinks

21 January 2014452 viewsNo Comment

In the ongoing Netflix vs HBO battle for subscriber eyeballs, and dollars, one video service has a bright future and the other? Not so much. Which highlights the corollary of the cord cutting phenomenon — cord trimming is very much a thing.

Not a believer? It might be too earlier to pick a winner in the face off between Netflix vs HBO, streaming is definitely on the rise.

Or, so goes the tale told by Variety. Over the last year-and-a-half, according to the Hollywood trade publication, HBO, Showtime, Starz and other premium TV channel subscriber numbers shrank by 6 percent from 38 percent of overall pay TV subs to 32 percent — people are trimming their cable TV bills.

Bad news for HBO? It gets worse when you look at the bigger picture.

For example, HBO, Showtime not only have a smaller share of the market, it’s a market that’s actually shrinking. In fact, pay TV operators have lost millions of subscribers over the last two years.

In August 2013, 86 percent of US households subscribed to cable, satellite or telco TV service, down from 88 percent in 2010, according to Leichtman Research Group (pdf).

One factor driving the decline is the simple fact that millions of young adults are cable nevers or people that have never subscribed to a cable or satellite TV service.

So, cable, satellite and premium TV providers are faced with a double whammy — a shrinking subscriber that includes fewer young adults. With fewer young customers, their future is at best uncertain.

Netflix vs HBO: Consumers Choose

It is widely believed that cord cutters, cord trimmers and cable nevers are responding both to economics — traditional pay is a purely discretionary budget item — and the growing quality of streamed TV and movie services.

Fresh data from market researcher NPD underscores the chaining nature of pay TV. On a stand-alone basis, Netflix now claims more 32 million subscribers in the US at the end of Q3 2012, up 24 percent y-o-y.

Taken overall, streaming video services — i.e. Netflix, Hulu Plus, Amazon Prime Instant, etc — could be found in 27 percent of US households in Q4 2013, up 4 percent of over the same period last year.

Again, it’s still the early days of the Netflix vs HBO conflict, there is no question which way the numbers are trending…